Problem Context:
The price of residential electricity has begun to increase and curbing consumption has become necessary for reasons including the following:
- There is a desire to save money in difficult economic times.
- The unhindered growth in consumption of electricity contributes to the increase in greenhouse gases in the atmosphere.
- Our increasing use of electricity is impeding our ability to break from the foreign sources of oil and gas that come from countries that do not have America's best interest at heart.
Behavior over Time:
For the past 50 years electricity has been treated as a commodity and the expectation has been that of a never-ending supply. We have used what we wanted and at the end of the month, paid the bill. Generally, rates have been set by public utility commissions based upon business plans provided by the utility companies with no link to market economies. With advent of de-regulation, rise in prices has led to a desire to address the problem. To implement efficiency plans, only wealthy homeowners have been able to install new technology while others have chosen to do without normal conveniences such as refrigeration or air conditioning. How we consider the use of electricity will change.
Policies now in Place or Under Consideration:
There are no effective policies in place at the present time except those self-imposed by early adopters. The current policies of tax credits and rebate programs that try to incentivize change do not seem to be working. For example, California implemented a goal oriented policy to have solar power on 1 million rooftops by 2018 but so far only about 60,000 have systems installed after 3 years. This slow growth rate is attributable to the homeowner being unable to afford the out of pocket expenses even with the incentives and the slow payback based upon electricity buy back rates. On top of this, the state will spend over $3 billion for the program in hopes of reducing overall energy consumption which has not occurred so far due to the rise in consumption by corporations and institutions. Also, homeowners use the savings to increase consumption, not reduce their bills. There are no practical methods to help our nation take advantage of the more than 50% reduction in traditional electrical consumption available through improved efficiency and alternative sources.
Issues and Concerns:
The problem is extremely complex. We can not buy more windmills or photovoltaic arrays and have our energy problems go away. The issues that we face include
1. Building homes that are too big for our needs while we fill them with devices that use even more electricity;
2. The difficulty in proving the practicality of efficiency improvements in older homes; the reluctance of the consumer to implement any kind of change;
3. Balancing a failing infrastructure with increased demand.
Also, power utilities are slow to change their business model. They cannot imagine and adapt to new ways of doing business.
The government must find a way to help all decision makers (utilities, homeowners, efficiency service providers) decide to change.
Energy Efficiency needs to become a stand-alone Resource Strategy that can withstand independent assessment and comparison to the Strategy of increasing of energy supply.
Study purpose and questions to be addressed:
The purpose of this study is to model the dynamic system of production, delivery and consumption of electricity in residences in order to investigate the interactions between policy and the decision makers and how these feedbacks affect residential electrical consumption. From this study, it is hoped that different types of incentives and policies can be implemented to take advantage of available methods to lower power bills, reduce electricity consumption, and limit the need for increase in electrical production in the future. Specifically:
1. Can Time of Use rates be better implemented to help reduce production capacity and electrical consumption?
2. Can the reduction of the homeowners' bill help change behavior?
3. What combination of Alternative Energy production and efficiency measures can be used to provide better energy security, more reliable distribution systems through load reduction, and not compromise homeowner lifestyle?
Brooks has done a good job in following the outline for a problem articulation. He has provided sufficient background regarding the problem of excessive electricity consumption and he has highlighted the fact that this problem has worsened over time and continues to. The two time frames referenced are especially helpful in showing the both the recent and long-term evolution of this issue. Although there are no effective policies in place at this time, perhaps the problem could be better defined if a couple of the failing incentive policies were detailed and information provided as to why they are not effective. As for the study purpose, I think it can be inferred from the last section what questions are to be answered with this study, but they are not clearly outlined. As for the modeling, I do think that a simulation study would help the author to identify some of the feedbacks acting within the system and would provide a helpful visual aid to use in working toward a solution to this problem. I offered one suggestion earlier in regard to the policy section, and the only other one I would have is that the questions to be answered be clearly outlined in the last section. This is an interesting problem and for a solution to be reached (which will likely not be any time soon) I agree with what Brooks pointed out in the Issues section in that those involved have to make the decision to change.
ReplyDeleteBrooks,
ReplyDeleteGreat problem to work on. As I said in class, the challenge is in keeping the scope manageable.
Your background section sets things up nicely and motivates the need to address this. It also makes it clear that you are limiting yourself to electric power supply/demand (vs general fossil fuel demand).
Some general comments:
1. Under BACKGROUND you refer to supply not keeping up with demand and provide a link. You ought to briefly explain how this is so....describe an example to help the reader understand what you mean. Also, you ought to make it clear that you are focusing on home-based consumption (or are you?). Or...are you focusing on all electricity consumption. It's good to clarify the scope early on. If you are focused on residential consumption, you need to explain how much a part of the total this is. After all, if it's only a small part, why should we work on it?
3. POLICY DISCUSSION: You say that there is no policy in place (apart from the example from CA). However, there is a policy...We are letting the market dictate our efforts to reduce consumption...regular supply/demand dynamics...or is that so? There is a policy (even if it's a "hands off" policy). Also, the incentives policy (i.e. CA) is a policy, but it appears to have negative consequences overall. I suggest you describe at least two policies: (1) a market-based "hands-off" policy (that maybe includes price regulation?), (2) incentive-based policies to encourage use of alternative energy sources, and maybe a third policy (3) market-based approach with no price regulation. Then you could focus your efforts on spelling out the mental models behind each policy, as well as any other consequences (unintended or otherwise). Your study purpose would be to evaluate these general approaches to policy and then use that analysis to gain insights on what might constitute a "best" policy.
What do you think?
2. Behavior over time. Need to provide more content and evidence. You claim that prices have risen...what data do you have to demonstrate that? You also claim that this happened after deregulation...can you show that? By how much have prices increased? Your last sentence in this paragraph is confusing...don't know what you mean.